South-China Logistics, a company controlled by state-owned Guangdong Provincial Communications Group, hopes to raise about HK$400 million to HK$500 million in the fourth quarter in an initial public offering in Hong Kong, market sources said.

The Guangdong-based firm, which picked China Everbright Capital as its sponsor, will use the funds raised to fund its expansion.

``The preparation is on track. The State-owned Assets Supervision and Administration Commission of the State Council approved its overseas listing plan in January. It also filed its listing application to the China Securities Regulatory Commission and the Hong Kong stock exchange, and is now waiting for their approval,'' the sources said.

The state assets agency gave the green light for the company to sell 173.065 million H shares, including 157.33 million new shares and 15.73 million existing shares.

South-China Logistics has had a near monopoly on providing third-party logistics and other services on the expressways in Guangdong thanks to its parent, GPCG, which owns interests in 85 percent of expressways in the province.

Its business scope includes information and logistics consultation, storage, transportation agent services, information processing, freight forwarding.

Its main subsidiary, Taiping Intersection, is the top profit contributor. It provides logistics services covering Guangzhou-Shenzhen Expressway, Humen Bridge and the Guangzhou-Zhuhai section of Beijing-Zhuhai Expressway. It also has a 95.56 percent stake in Guangdong Top-E Expressway Service, which has 13 pairs of expressway service zones and will increase this to 95 pairs in 2010.

Other stakes include 55 percent in Guangdong Weisheng International Freight Forwarding and 71 percent in construction materials provider Guangdong Xinyue Communications.

South-China Logistics posted a 44 percent increase in net profit from 42.25 million yuan (HK$40.47 million) in 2002 to 60.78 million yuan in 2003, on turnover of 1.364 billion yuan. At the end of 2004, it had total assets of 2.311 billion yuan, according to its Web site.

Analysts said there were few listed companies that can be used for comparison - in fact China Merchants DiChain (Asia) may be the only candidate.

DiChain, a logistics and warehouse operator listed on the main board, suffered a loss last year due to an asset provision. It reported a net loss of HK$13.4 million for the year ended December 2004, compared with net profit of HK$36 million a year ago.
(source:TheStandart)